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The draft rules of RERA are out but not too many people seem to be happy with it. The punitive measures
have been eased out and there is no clarity on the extent of disclosure of the status of under-construction
flats by developers. Will the developer register with the latest sanctions or should the previous changes be
accounted for? Will the consent of two-third of buyers for change in layout be applicable on existing
projects? Will an already delayed project fall under the ambit of RERA? These are some of the pressing
questions that still need to be answered. We hope the final draft addresses this ambiguity and the interest
of buyers are safeguarded with retrospective effect.
It is indeed intriguing to see that the National Consumer Disputes Redressal Commission (NCDRC) is
dealing with errant developers with an iron hand. In the past it brought Unitech and Lodha to task and now
it’s Jaypee Group who is facing the music. While the penalty order has been stayed by the Supreme Court,
two other rulings are still under review. However, it is sad that even with RERA looming on the one hand,
and the consumer court rulings on the other, delays remain a bitter truth in the Indian realty sector. If the
apex court doesn’t retain the rulings of NCDRC, it may not give any further orders to defaulting developers
in future. It is no secret that the sector cannot attain efficiency if execution delays and unfair pricing tactics
are not sorted out right away.
When we talk of affordability, we only talk about pricing in general. However there are many external factors
beyond the control of a developer or buyer which affect affordability. One such factor is Stamp Duty and
Property Taxes. While cities like Gurgaon saw a reduction in stamp duty a few months back, there are
others like Nagpur which await increased Stamp Duty and Property Taxes. While we are doing everything
possible to boost affordable housing, State governments must do a thorough reality check to assess
whether such increased levies are feasible at this juncture. If at all any increase in taxes and duties is
unavoidable, the quantum of hike must be checked. The market is very price sensitive any such move may
prove to be detrimental in the long run.
However, there is also some news that added cheer to the market. The SEBI commendably continues its
quest to make REITS an attractive investment arena. The regulatory body issued a consultation paper
making various proposals. These include relaxation in pricing/valuation norms, minimum number of
investors and increased investment in under-construction properties. So far REITS have garnered tepid
response from Indian players despite relaxations and flexibilities announced from time to time. It remains
to be seen if the current set of relaxations actually lure participants to REITS.
Pankaj Kapoor
Founder and MD, Liases Foras Real Estate Ratings and Research Pvt Ltd
FROM THE FOUNDER’S DESK
3
INDIA AT A GLANCE
'Fight for RERA' continues
Real Estate (Regulation and Development) Act
(RERA) is being touted as the ultimate savior for
buyers, but most still have doubts over the draft rules
for the RERA circulated by the government. The bone
of contention this time is the nature of plan submitted
by the builders. A particular group fighting for this
pointed out that the draft rules lacked clarity as to
which plan the builders of existing projects need to
submit while registering with the regulator - the
original, sanctioned plan or the latest version. We
believe it is in best interest of the buyers if the builders
submit the original plans because the latest plan will have got revised many times. Also, there is ambiguity
over the schedule of completion of projects. There are penal clauses in RERA but in the absence of specific
rules, the authorities will not be able to bring errant promoters to task.
States to charge lower stamp duty for affordable housing
Central Government has directed the states to reduce
stamp duty on registration of houses for the poor, to boost
affordable housing projects in India. The government has
selected around 2,508 cities in 26 states under the
'Pradhan Mantri Awas Yojana' to develop affordable
houses for the urban poor. Urban Development Minister,
Venkaiah Naidu, empathised with home buyers and stated
that the 10% stamp duty in certain states casts a burden on
the buyers. This is a welcome move and shows that the
Government is indeed walking the right path.
4
The question of vacant houses
The government declared that over 2 lakh houses,
constructed under Jawaharlal Nehru National Urban
Renewal Mission (JNNURM) and Rajiv Awas Yojana
(RAY), are still lying vacant. The highest number of
vacant houses are in Maharashtra with 41,449 units,
followed by Delhi (26,199), Gujarat (24,769), Andhra
Pradesh (20,639), Telangana (17,982) and Uttar
Pradesh (16,050). This is one of the biggest anomalies
of the real estate sector, where millions are homeless
and slums are proliferating, while over a lakh units lie
unoccupied. This is clearly indicative of a missing dimension in the cycle that needs to be addressed.
New constructions approved under Pradhan Mantri Awas Yojana
According to Minister of State for Housing and Urban Poverty
Alleviation (HUPA), 864 projects were approved this year under
the scheme, which was launched in June last year. These
projects aimed at construction of 7,28,840 houses for the slum
dwellers and urban poor, but only 19,255 units were completed
and as many as 1,07,687 houses were under construction.
India needs to really speed up the construction progress so that
we can reach the target of Housing for All by 2022.
5
MMR
Navi Mumbai proposes Smart City again
After being rejected in the last general body meeting, Navi Mumbai Municipal Corporation (NMMC) has
once again submitted its proposal for a Smart City status. The satellite town of Mumbai has a lot of potential
to be developed as a smart city. But a lot of work still needs to be done on the infrastructure front.
The long-awaited BDD redevelopment plan to get more units
The redevelopment of the age-old Bombay
Development Directorate (BDD) chawls is likely to get
delayed further as the State government will have to
seek clearance from the Union environment
committee to go ahead with the project. However the
good news is that they will get 500 sq ft houses in
place of their 180 sq ft tenements. Moreover, the
government will get 13,000 additional houses to sell
in the open market. We believe BDD chawls'
redevelopment will create a large housing stock,
easing the property market in the city.
Work to commence on MTHL before 2016-17
As per leading news agencies, work on the
Mumbai Trans Harbour Link (MTHL) is expected
to begin before the end of 2016-17, as the
MMRDA has received an encouraging response
in the preliminary bidding stage. Around 20
consortia have submitted bids for the three
components of the project that will bring faster
connectivity between South Mumbai and Navi
Mumbai. Housing units at locations too far from
work places is not the idea of an efficient urban
economy. Linkages should be established to
bridge the travel gap between residence and workplace to achieve housing for all in the true sense.
6
MMR reels under the pressure of increasing population density
The Energy and Research Institute (TERI) has reported
that population in MMR increased by a whopping 197% in
just four decades. The population density of the region is
37,000 people per sq km of built-up area. A population
density like this and continued vertical expansion is
creating pressure on the city. There is immediate need for
more land parcels to open up and those have to be
available at commutable distance from the work place.
Redevelopment also addresses a lot of issues associated
with the space constraints in MMR.
Mumbai civic body gets ready for DP 2034 execution
The BMC has geared up for implementation of the
draft Development Plan (DP) 2034 by drawing up the
execution strategy. The first action plan is expected
to be ready during April 2017 and March 2018.
Around Rs. 5,000 crore per year will be allocated for
implementation of the draft DP 2034. Most
developers in the city have been waiting for the DP
before planning any further projects. Lack of clarity
over the DP had also led to a slowdown in new
launches. After such a long wait, let us hope that the
DP is implemented in a timely manner, so as to avoid
further delay in new constructions.
7
NCR
Noida gears up for more than 72 completion certificates by
December
Noida Authority is working to issue completion certificates to more
than 72 housing projects on a fast track. Currently completion
certificates have been issued only to 47 houses; so this will take
another 3 months to complete. However citizens are of the
opinion that only issuing completion certificates is not enough.
Adequate infrastructural support is required to make the area
livable. Water supply, roads, streetlights are some of the major
concerns that need to be addressed to enhance the habitability
of Noida.
GNIDA asks developers to charge uniform rates for land acquisition
The Greater Noida Authority has directed the city's builders to charge homebuyers rationally for land
acquisition. Developers charging differential rates attracted lot of complaints from buyers. The Greater
Noida Industrial Development Authority (GNIDA) has also asked developers to start taking maintenance
charges only after residents start residing in their apartments officially. Though it is not an official order from
GNIDA, it surely will create pressure on developers to consider efficient pricing of land.
7 housing colonies in Delhi to be redeveloped
To address the problem of shortage of government accommodation in Delhi, the government has decided
to rebuild seven housing colonies to double the existing housing units from 12,970 units to 25,667. The
colonies to be redeveloped include some in Sarojini Nagar, Netaji Nagar, Nauroji Nagar through National
Buildings Construction Corporation Limited (NBCC); and in Kasturba Nagar, Thyagraj Nagar, Srinivaspuri
and Mohammadpur through Central Public Works Department (CPWD).
Commercial plots in Noida struggle to find buyers
The Noida Authority is still struggling to auction a dozen
commercial plots in Noida due to lack of response from buyers.
The sluggish real estate market and the high prices of plots
seem to have impacted the Authority's plans. The commercial
plots are to be used for activities such as shopping malls,
showrooms, retail outlets, hotels, restaurants and offices
subject to the master plan of the city. Noida Authority plans to
re-launch the scheme after fine-tuning it to make it more
profitable for buyers and investors.
8
NAGPUR
Stamp duty hiked in Nagpur Metro Rail corridor
The urban development department has approved
the proposal to increase stamp duty in the Nagpur
Metro Rail corridor to 7.5% from 6.5%. The corridor
refers to the area lying within 500 metres on both
sides of the Metro track. While the stamp duty has
been hiked, the urban development department still
has reservations about increasing the FSI. This is a
development which will not go down too well with the
buyers or developers. We are in a phase when we
need to promote affordable housing and transit-
oriented-development, and steps like this act as hindrances.
The game of property tax in Nagpur
Nagpur Municipal Corporation (NMC) has decided
to recover property tax of current fiscal as per the
old tax system. It is reported that demand notes of
2016-17 have been prepared as per the old system
but subject to the new system. Taxpayers will have
to pay the difference amount of 2015-16 and 2016-
17 at one time in the next fiscal, which implies
double the load. Burdening citizens with tax
calculations like this is sure to act as a dampener
to the Nagpur realty market. City.
TIER II AT A GLANCE
9
JAIPUR
Spanish support for Jaipur smart city project
The Jaipur Smart Mission Limited (JSML) has appointed Epista, a
Spanish company, as the project management consultant (PMC) for
the execution and implementation of its smart city project. The
Spanish firm will help the civic body in planning, designing, developing
and monitoring smart city projects in Jaipur. The State government is
also in discussions to incorporate three more projects under the smart
city mission which may be areas like Gandhi Nagar station, Ramganj
Bazaar and Rajasthan University. Jaipur is one of the fastest growing
tier II cities and with sound implementation of smart projects, it can
really position itself as one of the leading realty destinations in India.
INDORE
Indore rides high on upcoming infrastructural projects
The board members of Indore Development Authority (IDA)
discussed new plans and projects for the city. The construction of a
ring road from Dhar road to airport road got approval and the decided
width of the road would remain 60 meters as proposed in the master
plan for year 2021; IDA sanctioned Rs. 34 crore for it. In a bid to
promote greenery in city, the board is also keen on taking up
plantation drives in the city.
10
KOCHI
Kochi Metro phase two to be financed by France’s AFD
The French development agency, AFD, is in talks to fund the second phase of Kochi Metro from Jawaharlal
Nehru stadium near Palarivattom to Infopark near Kakkanad as well as the improvements of major junctions
like Edappally and Kalamassery. Kochi is on a development spree and phase one and two of Kochi Metro,
Water Metro and Smart City projects would attract a total investment of Rs. 11,000 crores to the city. The
metro is also an integral part of Kochi’s smart city project and if these progress as planned, things will be
really different for the city’s realty landscape. reducing the overall cost of the flat and eventually increasing
the affordability.
11
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The content discussed above is based on reports by leading national newspapers. Neither the whole nor any part of
this document or any reference to it should be copied or reproduced without Liases Foras’ prior written approval.
The data of real estate projects has been collected through field surveys as well as primary and secondary research.
As a result of the methodology, sources of information are not always under control of Liases Foras. The information
and analytics also undergoes estimates and compilations derived out of statistical procedures. Liases Foras does not
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Authors:
Mr. Pankaj Kapoor
Founder and MD-Liases Foras Real Estate Ratings and Research Pvt. Ltd
Email id: [email protected]
Ms. Namrata Sen Chanda
Content Manager
Email id: [email protected]
12
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